Third-Party Claims in Litigation
When most people think of lawsuits, they typically imagine one plaintiff suing one defendant. Of course, many lawsuits involve more than one defendant, and some lawsuits also involve more than one plaintiff. Moreover, some defendants may have third-party claims against people who are not yet involved in a given lawsuit. In order to pursue third-party claims against parties unnamed in the original lawsuit, third-party plaintiffs usually need to file a third-party complaint and sue these parties as third-party defendants. Sometimes, third-party defendants will also be brought into the main lawsuit for which litigation was originally initiated. Although third-party claims are sometimes confusing, third-party lawsuits typically involve a few causes of action.
Indemnification
Indemnification is one of the most common third-party claims. Indemnification is when another party defends the indemnified party and pays for judgments and/or attorneys’ fees they may pay in litigation. Oftentimes, parties agree in contracts that they will indemnify another party if matters involving that contract end up being litigated. For instance, general contractors typically require subcontractors to indemnify them if there is litigation involving the construction work performed by both parties. Some states may prohibit parties from seeking indemnification for their own negligence. However, parties may sometimes sue a party for indemnification so they can get protection from the acts of the indemnifying party.
Even if there is no contract between parties requiring indemnity, it is possible to argue that a party should nevertheless be entitled to indemnification from another party. If there is a great disparity in the wrongdoing of the parties in a lawsuit, or if an implied contract exists between the parties, equitable indemnity may be argued. As a result, if a litigant thinks that another party is at fault in a case or has a special relationship with another, they should inform their lawyer of the details as soon as possible.
Contribution
Another one of the third-party claims that are typically brought in litigation are claims for contribution. Contribution is when a defendant seeks to hold another negligent party liable for part of a judgment that may be recovered against them in litigation. Normally, a plaintiff tries to sue all negligent parties when they file a lawsuit. This is because if there are more defendants in a case, there are more parties that can contribute funds to settle a matter. If all of the negligent parties are sued in a lawsuit, the defendants can assert cross-claims against each other for contribution.
However, plaintiffs do not always sue all of the negligent parties in a matter. Plaintiffs may not know all of the entities that may be liable for injuries, and this is true for construction site injuries and other complex matters when they may be a handful of entities who were involved in a given incident. Furthermore, plaintiffs may not sue a negligent party because they may have waived their right to make a claim against this party. In these situations, the defendants who are named in a lawsuit may file a third-party case against other negligent parties. In this way, they can be protected from having to bear the brunt of a judgment by themselves in the event that a plaintiff recovers a large sum of money against them.
Additional Insurance
Another one of the common third-party claims involves additional insurance requirements. Oftentimes, when companies decide to work together on a project, they agree to do so only if one party agrees to obtain insurance coverage that protects both companies. This is usually called “additional insured” status, and the party responsible for procuring such insurance must coordinate with their insurance company to ensure that the other entity is also covered under their insurance policy. However, sometimes the company responsible for obtaining insurance fails to obtain insurance altogether or fails to name the other entity as an additional insured. In these instances, the party entitled to insurance coverage may have a claim against the party that was responsible for obtaining insurance.
These claims may be brought in separate lawsuits between the parties that have a contractual agreement governing the procurement of insurance. However, these claims may also be brought in third-party actions related to an underlying lawsuit. This is because the parties in the underlying lawsuit may have an interest in the question of additional insurance, and it may be more efficient for such claims to be made in a third-party action.
Other Causes of Action
Other causes of action can also form the basis for third-party claims in litigation. Sometimes, parties have disputes between themselves that do not directly relate to claims made in an underlying lawsuit. Such claims can involve breach of contract, fraud, and other causes of action. Certain court rules require that claims be made against all parties involved in a certain transaction or occurrence, and so third-party claims may involve these collateral causes of action. Furthermore, courts may have jurisdiction over these other claims since they are connected to an underlying case, so parties may wish to assert those cause of action as third-party claims.
A skilled attorney should know all of the claims that can be asserted against third parties, and can make sure that all relevant claims are made in litigation. If you are looking for an experienced New York and New Jersey litigator to handle your third-party claims or other legal issue, please feel free to contact The Rothman Law Firm to request a free consultation.